conference date: May 12, 2011 @ 2:00 PM Pacific Time
for quarter ending: May 1, 2011 (first quarter fiscal 2012)
But I own competitors AMD and Marvell.
Overview: Solid quarter from Tegra ramp.
Basic data (GAAP) :
Revenues were $962.0 million, up 8.5% sequentially from $886.4 million, but down 4% from $1.002 billion in the year-earlier quarter.
Net income was $135.2 million, down 21% sequentially from $171.7 million, and down 2% from $137.6 million year-earlier.
EPS (earnings per share) were $0.22, down 24% sequentially from $0.29, and down 4% from $0.23 year-earlier.
Revenue for Q2 fiscal 2012 is expected up 4 to 6% sequentially, with GAAP gross margin near 51% and operating expenses of $332 to $336 million.
"Our Tegra mobile business took off" this quarter, said CEO Jen-Hsun Huang. Agreed to acquire Icera for its cellular base band processors. They are SDR, software defined radio, leaders. Believes combination will make NVIDIA the leader in smartphone and cellular tablet market.
Non-GAAP numbers: net income $165.7 million, up sequentially from $142.4 million, but down from $169.0 million year-earlier. EPS $0.27, up sequentially from $0.24, but down from $0.29 year-earlier. Gross margin was 50.6%, way up from 45.7% year-earlier.
Product mix in quarter was richer than expected.
In the quarter new GeForce GPUs models were launched. Tegra used in Android launches for Motorola phones (WM: calling them superphones, which is lame), for Acer and Asus tablets. More Tegra 2 phones and tablet releases are planned.
Desktop business was well positioned and saw good momentum in China. Chrysis 2 and other advanced game releases are driving GPU upgrades.
GPU business up 3.8%
MCP (chip set) segment down significantly as planned.
Professional segment flat, with Tesla down but Quadro up.
Notebook GPU business did well, believes will increase market share with Intel Sandy Bridge based systems.
Consumer segment revenue $122 million, which includes Tegra 2.
Cash and equivalents ended at $2.73 billion. Inventories $380 million.
Cost of revenue was $477.5 million, leaving gross profit of $484.5 million. Operating expenses of $329.6 million included $231.5 million for R&D and $98.1 million for Sales, general and administrative expense. Leaving operating income of $154.9 million. Other income $1.6 million. Income taxes $21.3 million.
Investor concern about first generation tablets. Tegra business? Tegra business is largely from phones. First tablet generation came from carriers in 3G. Tablet users are mainly buying at retail for Wi-Fi only use. Those concerns have been addressed. Newer tablets are more affordable, more available at retail stores. We expect another wave of thinner, lighter tablets to ramp soon, with Android Honeycomb 3.1 also available soon, will enable cloud services.
Future Google OS releases and your quad-core technology? We are excited with what they are doing on "ice cream sandwich" version of their OS.
In Q2 guidance, segment detail? GPU business will be about flat. Professional about flat. Consumer business uppish. So better than usual seasonal down pattern. MCP business decline to continue. It dropped about $150 million y/y.
Licensing revenue? About $40 million per quarter. [This is from Intel]
Quad core processor should contribute revenue later in the year.
Icera acquisition assumptions? Slightly dilutive for remaining part of year. We will know more when we complete the acquisition. They are unique in having software based digital voice capabilities.
Tegra plus modem integration? No plans to integrate their modem into Tegra. More a matter of making both processors available, so we can mix and match as appropriate. But we could integrate at some future point when it makes sense.
Margin once you take into account the $40 million license payment? Guidance for Q2 margin reflects what we know now. In Q1 we had a lift from GTX 590 launch.
Project Denver, moving ARM into traditional PCs? Project Denver is two generations away. A lot depends on compatibility with software. Already more ARM computers are being shipped than x86. That means software developers will shift to ARM.
Professional solutions growth, what would it take? We are working on that. Workstation industry needs new capabilities, which is why we built Fermi. As we bring capabilities to the market, the workstations should be more attractive to design and technical industries.
When you back out the $40 million from Intel, can you get back to old silicon revenues? The real question is can we grow our GPU business, which we can. Our first generation of Fermi was not as graceful as we had wished. We had a lot of engineering to do, and with Fermi 2 we had a come back. We are improving in notebook GPU share now, so we expect the GPU business to grow.
Another advantage of Icera is they have carrier relationships all over the world. Buying them was much less expensive than developing the technologies ourselves.
Tegra is being designed into more and more cars, which is a big revenue opportunity for 2012.
Cash flow from operations was $199 million.
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